What’s at the Heart of Loyalty – the Kobie 2024 Consumer Research Report tells all

Our in-depth review of the latest Consumer Research from Kobie

Editor’s Note

Kobie recently published its latest Consumer Research Report, The Heart of Loyalty. I was fortunate to listen to an early overview of the results, presented by Dr. JR Slubowski, Kobie’s AVP of Strategic Consulting, during Kobie’s OnPoint loyalty conference. JR, who leads Kobie’s Research Center of Excellence, shared findings that address key questions every loyalty marketer faces:

• How do I measure my program health?
• Do my members feel seen, heard, and recognized?
• How do we engage members between transactions?

The report’s findings are based on responses from over 4,000 consumers across the U.S. and Canada, exploring topics such as the appeal of features and benefits, personalization, engagement, recognition, gamification, and more.

As you read this, keep in mind that I’m highlighting the points that stood out to me. There is much more depth in the full report, so I encourage you to download it here and contact the Kobie team directly with any questions.

The Loyalty “Check Engine” Light

Perception often outweighs facts, especially in marketing. While we may believe in our loyalty programs, it’s the customer’s perception that truly matters. The report quantified elements of the gap between marketer and member perceptions, constituting a dashboard of “Check Engine” lights.

Kobie found that 55% of consumers disengage from loyalty programs within the first six months, and 74% within the first year. This underscores the need for urgent and continuous member engagement from the moment they enroll.

One major reason for program churn is the time it takes to earn rewards, with 49% citing this issue early on and 52% later in the lifecycle. This signals the importance of continually refreshing and curating value propositions throughout the loyalty journey.

Members also desire flexibility in their rewards. 84% expect their points to work like money, emphasizing the need for choice and communication about reward options. Notably, 88% want programs to inform them about how to use and redeem their points.

Addressing these “Check Engine” lights can lead to higher engagement and ROI. Kobie’s analysis shows that members who redeem in multiple categories spend 3.9x more than those who never redeem.

Managing Cash Back

Cash back rewards ranked high across business verticals, but not for the reason you might expect. In this year’s survey, program members strongly associated cash back with flexibility and choice, using phrases like, “I can just buy what I need or want” to describe why cash back resonated with them.

There are risks and rewards associated with allowing a program to become too centered on this one reward option. The report includes a thorough analysis of the pros and cons of cash back. Ultimately, Kobie recommends making the cash back reward more experiential and tapping into people’s intrinsic motivations to strike the right balance.

Program Members are Willing to Share their Personal Data

Consumers are keen to share their data to enhance their program experience, particularly if it gives them more influence over that experience. However, they’re less inclined to share their program experiences with others. Social features like charitable donations, community involvement, and rewards for social sharing were among the least appealing benefits.

The takeaway? Authentic community engagement trumps incentivized participation. Programs that organically foster community will yield better results.

A New Approach to Personalization

Personalization can be tricky. Much like basic needs, consumers don’t notice it when it’s done right, but they’ll surely notice when it’s done poorly. For instance, recognizing tenure and birthdays is generally appreciated but not critical.

Conversely, 51% of respondents said irrelevant messaging would negatively impact their perception, while only 23% felt relevant messaging enhanced their experience. This highlights the need for a solid zero-party data strategy – one that not only gathers data but uses it effectively to personalize experiences.

How to Manage a Long-Term Relationship

Maintaining a relationship with your next-door neighbor is much easier than maintaining one with a friend across the seas. That’s why understanding how to keep customers engaged between transactions is so important. Creating meaningfulness, joy, and a sense of fulfillment are key to managing this “in-between” aspect of customer relationships.

There are significant opportunities for brands to leverage their program communications to deliver joy and fulfillment. The real learning here is the pivotal shift in how to incorporate gamification into programs. The report closely examines how tiers and status in programs have the power to influence loyal behaviors.

Status Matters – But Don’t Give It Away

The report found that 75% of people said qualifying for a higher tier made them feel accomplished, and 71% said it made them feel special. Providing opportunities for members to achieve higher program status correlates to higher engagement levels, but there’s a pitfall to avoid.

In short, opportunities to earn status should be plentiful, but status should not be granted outright. Giving members multiple paths to earning status creates a positive feedback loop, while granting status too easily disconnects the cause and effect of program engagement, leading to a diminished perception of the program and weaker consumer attachment to the brand.

Table Stakes and Shiny Objects – What Constitutes Innovation?

The research examined the impact of 14 different program benefits, some you might consider table stakes and others that you would view as “shiny objects.” Surprisingly, there was a higher degree of neutrality towards these benefits than you might expect, leading to the following recommendations:

1. Don’t just introduce the shiny object, communicate its value to your members if you want them to take the plunge. Otherwise, you risk investing in innovation only to see disappointing adoption by a critical mass of your audience.
2. Consider testing new concepts with smaller subsets of members to iron out the operational aspects of the experience. Run trials with the segments of your membership you consider to be highly emotionally engaged.

Creating a Sustainable Feedback Loop for Program Health

To boost the overall health of your program, you should consistently evaluate it against the list of tough questions below. The reality today is that loyalty program members are not only comparing your program to your competition’s, but to every loyalty program they’re a part of.

1. How long does it take your members to earn a reward in the program?
2. How do your members feel about their membership in the program?
3. What features and benefits do your members want?
4. How personalized do your members feel their experiences are?
5. What kinds of zero-party data already exist in your organization?
6. How well do you personalize content, channel, and cadence based on member preferences?
7. How much of your members’ mindshare does your program occupy?
8. What strategies do you have to engage your members in-between transactions?
9. Do members experience joy, fulfillment, or a sense of accomplishment through your program?
10. If you have tiers, do they result in higher levels of engagement and spend?
11. What are you doing to tap into the intrinsic motivations of your members?
12. Are you endowing status in your program or endowing progress?
13. What is your evolutionary roadmap for integrating new features and benefits?
14. What kinds of onboarding plans do you have when you roll out a new, innovative feature?
15. How are you using what your brand stands for to tap into the loyalty of your members?